Like a giant star collapsing into a black hole, Washington Mutual’s bankruptcy was so big it ripped shreds in the very fabric of economic space and time, and created baffling conundrums and paradoxes. Such as: How could WaMu have had some 150 branches in Oregon and yet have had no legal presence there?
According to the trust set up to pay off as much of the old company’s debts as possible, those branches belonged to the bank, which now is part of JPMorgan Chase — not the holding company that filed for bankruptcy protection in September 2008.
What’s at issue is less than $6 million in back taxes, the equivalent of a rounding error in the multibillion-dollar WaMu bankruptcy.
The whole kerfuffle, which now awaits a ruling by bankruptcy Judge Mary Walrath, shows what can happen when a company managed as a single entity is forcibly rendered into its component pieces. (Among other things, you start to see a lot of phrases like “malformed attributional nexus argument” in legal documents.)
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Shortly before regulators seized the tottering thrift, Oregon tax auditors determined that WaMu owed the state $29.4 million in back corporate excise taxes related to some real-estate units — cleverly named Marion Street Inc., University Street Inc. and Seneca Street Inc. — headquartered in that state.
After the seizure, Washington Mutual Bank (WMB) became part of Chase, while the parent company, Washington Mutual Inc. (WMI) filed for Chapter 11 in Delaware. After years of convoluted legal wrangling, a small remnant emerged from bankruptcy eight months ago as WMI Holdings; a “liquidating trust” was created to repay the old WaMu’s creditors.
As part of the global settlement agreement that cleared a path for WMI Holdings’ exit from bankruptcy, Chase agreed to pay 80 percent of whatever Walrath determines WMI’s Oregon tax liability to be.
That means the trust would be on the hook for, at most, only about $5.9 million.
But the trust has fought Oregon tax authorities, arguing that the parent company — which was the part that declared bankruptcy — had never done business in Oregon, so Oregon had no right to tax it.
True, the real-estate units were subsidiaries of WMB, which was 100 percent owned by WMI.
But in court papers, the trust argued that “WMI’s economic interests (in WMB) do not establish a presence.”
Oregon tax officials think this argument is, to use legal parlance, a load of hooey.
Marilyn Harbur, one of the attorneys who argued Oregon’s case in bankruptcy court last month — in fact, four years to the day after WaMu’s seizure — noted that WaMu was run as a single, integrated entity.
The holding company, for example, issued billions of dollars in debt securities and “downstreamed” the proceeds to the bank; it relied on dividends received from the bank to repay the debt.
The bank’s logo and trademarks were owned by the holding company, which let the bank use them for free.
“Without the trademarks, domain names and other marks owned by WMI and used in Oregon, WaMu in Oregon would not have been WaMu,” Harbur wrote in one brief.
Should Judge Walrath agree with WMI, Harbur said, the state plans to pursue the matter in state Tax Court, where it has filed actions against both WMI and Chase for the money.
— Drew DeSilver, firstname.lastname@example.org
Apartment developer Harbor Urban is getting close to finalizing sales of two of its more prominent projects, managing director Jim Atkins says.
There could be announcements as soon as this month on 37-story Aspira, in the Denny Triangle, and 17-story Alto in Belltown. All 184 units at Alto, completed just this spring, already are leased, Atkins says.
Harbor Urban — formed earlier this year when Urban Partners of Los Angeles acquired Seattle-based Urban Partners — also is selling its Landes complex on First Hill. But that doesn’t mean it’s getting out of the apartment business.
The company is leasing up its recently completed Green House complex in Columbia City — half the apartments already are spoken for, Atkins says.
Three more projects are under construction: Nova, in West Seattle; Kavela, in Roosevelt; and Viktoria on Second Avenue downtown, the latter in partnership with Goodman Real Estate.
Harbor Urban also is seeking permits for two complexes in Fremont, Atkins says, and exploring still more projects.
They’re all part of a record wave of apartment development that some contend could leave the market overbuilt.
“It all comes down to job growth,” he says — and Seattle has it.
— Eric Pryne, email@example.com
Last year’s Occupy Wall Street movement persuaded thousands of people to open new accounts at credit unions and community banks — but it didn’t make a dent in the big banks’ market share for deposits in Washington state.
New data released last week by the Federal Deposit Insurance Corp. show that as of June 30, Bank of America still ranked first in deposits, with 21.3 percent of bank deposits in Washington, followed by Wells Fargo (11.1 percent), U.S. Bank (10.4 percent), JPMorgan Chase (9 percent) and KeyBank (7.5 percent), according to the FDIC.
And Washington-based banks collectively held only one-third of bank deposits in the state, down from 35 percent in June 2011.
But the Occupy movement’s supporters have one thing to cheer about: Deposits at Washington credit unions grew 8.3 percent over the same 12-month period to more than $29.6 billion, according to the National Credit Union Administration.
That was more than twice as much as deposit growth at banks in Washington, which grew 3.7 percent to $113.3 billion, FDIC data show.
-— Sanjay Bhatt, firstname.lastname@example.org or on Twitter @sbhatt